Strategic Management of General Mills: Identification of SBUs, BCG Matrix Analysis, and Recommendations

This article discusses the strategic management of General Mills, including the identification of SBUs, BCG matrix analysis, and recommendations for growth and success. It provides insights into the market growth and market share of each SBU and suggests strategies for innovation, product development, and advertising to stay ahead of the competition.

Strategic Management
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Contents
Introduction.....................................................................................................................................3
Part- a- Identification of SBUs, market growth rates and rival market share.................................3
The above discussion highlights that General Mills is doing well in most of the SBUs...................8
Market growth Vs Market share of the 5 SBUs discussed above....................................................8
Part-b – BCG Matrix.........................................................................................................................9
Recommendations...........................................................................................................................9
Conclusion......................................................................................................................................11
References.....................................................................................................................................12
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Introduction
Strategic business unit (SBU) is a fully functional unit of an organisation having a vision,
marketing plan and revenue centre of its own (Aaker & McLoughlin, 2010). An SBU could be a
product line, a branch or the complete business (Alkhafaji, 2013). General Mills is a US
multinational company which manufactures and markets consumer food products (General
Mills, 2018). The company has many well-known and profitable food brands under its umbrella.
Part- a- Identification of SBUs, market growth rates and rival market share
General Mills has five major product lines globally (General Mills, 2018). These are cereals,
snacks, convenience meals or ready to eat food items, yogurt and ice creams (General Mills,
2018). These product lines have separate marketing plans, structures and vision for success
(General Mills, 2018). Therefore, these product lines of the company can be called SBUs.
Following is tabular comparison of the different SBUs of General Mills
SBU’s of General Mills
SBU name/
Product line
Reasons for identification
as SBU
Market growth rates and
strategy
Nearest Rival’s
market share
Cereals market
product line
General Mills has an
extensive cereal product
line with many cereal
brands like Cheerios,
Monster cereals and Coca
puffs etc. (General Mills,
2018).
These cereal brands have
their own vision,
direction, and advertising
strategy and target
Breakfast cereal market
has been growing rapidly
over the past few years
(mordorintelligence.com,
2018). This is because
people want healthy and
easy to make breakfast
for their family and kids
(Buhamra, 2013). The
market is growing at a
rate of 4.5% Per annum
Kellogg’s and Cereal
partners worldwide
are the nearest
rivals having nearly
40 and 19%, market
share respectively
(General Mills,
2018).
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audience. An SBU has this
type of structure
(Freeman, 2010).
Therefore, cereals have
been identified as a
separate SBU of General
Mills.
which is a very healthy
sign
(mordorintelligence.com,
2018). In the US, General
Mills has 31% market
share (General Mills,
2018). Globally General
mills cereals have a joint
venture with Nestle
which is known as Cereal
partner worldwide
(Frynas & Mellahi, 2015).
This venture has market
share of 17 % (General
Mills, 2018)
Snacks market
product line
General Mills have a line
of highly popular snack
brands like Annie’s foods
which specializes in
organic food like pastas
other snacks (General
Mills, 2018).
Another snack brand of
the company is Bugles
which specializes in corn
snacks (Eden, 2013).
These snack brands have
their own marketing and
advertising strategy and
There is a growth in
demand for branded
snacks due to increase in
health and hygiene
awareness (Goworek,
2015).
The global snack market
is growing at nearly 3%
per annum (Global
Industry analysts, 2018).
Global snack market
creates nearly $1.7
Billion business
worldwide.
The largest
company in snack
food industry is
PepsiCo which has
nearly 38.5 market
share (Global
Industry analysts,
2018). Whereas
share of General
Mills in snack food
industry is 17%
(General Mills,
2018)
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product development
cells. This is a sign of
being an SBU (Hill, 2012)
Therefore, the snack
product line has been
identifies as an SBU
Convenience
foods market
product line
General Mills has a range
of convenience food
items like breads, frozen
food, brownies etc.
(General Mills, 2018).
These food products have
separate research wing,
marketing strategy and
procurement and sales
departments (General
Mills, 2018).
Therefore, this product
line has been identified as
a separate SBU.
Life style of people is
becoming busier by the
day. Therefore,
convenience and ready
to eat food market is
growing rapidly
(Buhamra, 2013).
The global convenience
food market is said to be
growing at a rate of
nearly 7% annually
(Mordorintelligence,
2018).
General Mills has a 17%
market share in the
convenience food
market with a range of
products like frozen
foods and breads.
(General Mills, 2018) The
products are sold
through retail outlets
and marketed through
ITC has the largest
worldwide market
share in ready to eat
or convenience food
inducer at around
38%
(Mordorintelligence,
2018).
There is a huge
opportunity for
General Mills to
grow in this market
due to rapid growth
in consumer
demand (Buhamra,
2013)
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various media channels
like TV and print.
Yogurt Product
line market
Yogurt is a major product
of General Mills which is
sold through various
major brands (General
Mills, 2018). Yoplait is its
leading brand with major
presence in US, Australia,
Mexico and Canada. As
the Yogurt brands have
their own management
strategies like branding,
advertising and product
management, this
product line has identified
as a separate SBU
Globally the consumer is
becoming more and
more health aware
(Buhamra, 2013). Yogurt
has various health
benefits due to which
the market for this
product is growing at a
moderate rate of 4.5%
per annum
(Mordorintelligence,
2018).
General Mills yogurt
brands are very popular
in US and Australia. It
has global market share
of 15% (General Mills,
2018).
Most of the market is
concentrated around
America. However the
new competition from
Greek Yogurt product
variant is posing threat
to this market
(Mordorintelligence,
2018).
General Mill’s
Yoplait has been the
market leader in
Yogurt market since
the past decade
(Mordorintelligence,
2018).
However, Chobani,
which is a
manufacturer of
Greek Yogurt, is fast
catching up with the
market leader
(General Mills,
2018). The nearest
rival has also
acquired nearly 19%
market share and is
growing very rapidly
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Ice cream
market product
line
General Mills sells ice
cream though its popular
Häagen-Dazs ice cream
brand (General Mills,
2018). The brand is sold
in 50 countries through
900 stores. The brand is
managed through a
separate department of
the company and has
own sales and marketing
strategy (General Mills,
2018). Therefore, it can
be called an SBU
Ice creams are extremely
popular with people of
all age groups (Buhamra,
2013). The global ice
cream market is set to
reach a business level of
USD 89.5 Billion by 2023
(Mordorintelligence,
2018). The market is
growing at a rate of 4.9%
Per year
(Mordorintelligence,
2018).
The market is extremely
fragmented with many
large and small players.
Major competitors of
General Mills in this
market are Unalive and
blue bells (General Mills,
2018)
General Mills has a
relatively small market
share of 5% in the ice
cream market as it has
only one brand (General
Mills, 2018)
Unalive has a huge
presence in the
market at the rate
of 21% due to its
varied assortment
of Ice-cream
(Mordorintelligence,
2018).
However, with right
marketing and
advertising General
mills can increase its
market share.
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The above discussion highlights that General Mills is doing well in most of the SBUs.
Market growth Vs Market share of the 5 SBUs discussed above
Market Growth Vs Market share
SBU Market
Growth
Market
Share
Market
share of
the largest
rival
Relative
Market
share
Status Recommended
Strategy
Cereals 4.5 % 19% 40% 0.47 Market
Share Rising
Market
Growth-
Medium
SBU is showing
traits of cash
cow hence it
should be
harnessed
Snacks 3 21 % 38.5 % 0.56 Market
Share
Moderate
Market
Growth-
Low
SBU is showing
traits of cash
cow hence it
should be
harnessed
Convenience
Meals
7% 17% 38 % 0.45 Market
Share on
the lower
side
Market
Growth =
very high
The firm
should
innovate to
increase
market share
Yogurt 4.5 % 15 % 19 % 0.78 Market
share –
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Declining
Market
Growth-
Moderate
to low
ICE Cream 4.9 % 5 % 21 % 0.23 Market
share –low
Market
growth
moderate
Therefore different SBUs of General Mills have varied growth potential.
Part-b – BCG Matrix
BCG matrix is a method for a firm to understand the market share and market growth dynamics
of its various business units (Eden, 2013).By understanding this dynamics the firm can
formulate long term strategies pertaining to the business.
From the above table following BCG matrix can be created.
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0.20.30.40.50.60.70.80.9
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
BCG Matrix
Market Growth
Reletive Market
share
Question Mark
-Convinience MealStar- Yogurt
Cash Cow
Snacks and
cereals
Dog-
Icecream
Fig-1 Source- Made by Author (2018) based on (Alkhafaji, 2013)
Recommendations
1. Though all SBU markets of General Mills are growing, the fastest growing market is that
of convenience meals. This is because people do not have time to cook due to busy
lifestyle and prefer ready to eat food. The market share of the firm is also growing but is
on the lower side of competition. . Hence, this SBU is a question mark Therefore; the
firm should needs to make a decision about investing further or divesting from the
product. As the market growth is high the firm should think of new innovations in
convenience food like breads, biscuits and frozen food. The firm should also come up
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with new and innovative advertising and product strategies. This will help the SBU in
becoming a star rather than a question mark
2. General mills has highest market share in cereals SBU as this product line is one of its
most popular. However, the market growth rate is lower as compared to convenience
meals. Therefore, this SBU is a cash cow. Consequently, the company should undertake
the strategy of harnessing maximum revenue from cereals product line in the current
period. This can be done by sales promotion techniques like giving discounts on more
purchases etc.
3. The market share of the firm in the Ice cream SBU is very less. However, the market is
growing at a moderate pace. However competition is also very high. The limiting factor
with this SBU is that the firm has only one brand of ice cream due to which it is not
being able to compete with the market leader. Hence, this SBU is a dog. Therefore, the
firm should think of either divesting from this SBU or try to develop new brands and
flavours. As the firm is financially strong it should give another chance to this SBU.
4. General Mills has been a market leader in Yogurt market. Therefore, this is its star
product. However, introduction of innovative Greek yogurt by the new competitor has
increased competition in the market. However, the market still has growth potential if
the firm innovates in its Yogurt flavours. However, the firm will have to come up with
creative ideas or plunge into Greek Yogurt category to retain its star status.
5. General Mills has a considerably lower market share in snacks market but market
growth is moderate to high because of high consumer demand. Thus is a cash cow. ITC
and PepsiCo have become much more popular brands. However, the company has
enough market share to generate cash revenue. Product innovation and aggressive
market strategy can help it in generating cash from this SBU.
6. From the above we can infer that, the firm is doing considerably well in almost all
markets. However, aggressive marketing strategy and creative thinking is required to
sustain in the market.
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Conclusion
BCG matrix helps in understanding the growth and market share dynamics of a firm. Through
BCG matrix, General Mills can decide what type of strategy to be used for its product line.
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References
Aaker, D. A. & McLoughlin, D., (2010) Strategic Market Management: Global Perspectiv. New
Jersey: John Wiley & Sons.
Alkhafaji, A., (2013) Strategic Management: Formulation, Implementation, and Control in a
Dynamic Environment. New York: Routledge.
Buhamra, C., (2013) Retail Marketing Management: Concepts, Guidelines, and Practices.
Bloomington: AuthorHouse.
Eden, C., (2013) Making Strategy: The Journey of Strategic Management. SAGE: London.
Freeman, R. E., (2010) Strategic Management: A Stakeholder Approach. Cambridge: Cambridge
University Press.
Frynas, J. & Mellahi, K., (2015) Global Strategic Management. oxford: Oxford University Press.
General Mill, (2018) About Us. [Online]
Available at: https://www.generalmills.com
[Accessed 15 February 2018].
Global Industry analysts, (2018) The global snack food market. [Online]
Available at: http://www.strategyr.com/MarketResearc
[Accessed 15 Feb 2018].
Goworek, H., (2015) Retail Marketing Management: Principles and Practice. Essex: Pearson
Education Limited.
Hill, C., (2012) Strategic Management: An Integrated Approach. New York: Cengage Learning.
mordorintelligence.com, (2018) Global Breakfast Cereals Market - Growth, Trends and
Forecasts (2018 - 2023). [Online]
Available at: https://www.mordorintelligence.com/industry-reports/breakfast-cereals-market
[Accessed 15 Feb 2018].
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Mordorintelligence, (2018) Global Ready-to-Eat Food Market - Growth, Trends, and Forecasts
(2018- 2023). [Online]
Available at: https://www.mordorintelligence.com/industry-reports/ready-to-eat-food-market
[Accessed 15 Feb 2018].
Mordorintelligence, (2018) Global Yogurt Market - Global Trends, Competitive Scenario and
Forecast. [Online]
Available at: https://www.mordorintelligence.com/industry-reports/yogurt-market
[Accessed 15 Feb 2018].
Mordorintelligence, (2018) Ice Cream Market- Global Trends. [Online]
Available at: https://www.mordorintelligence.com/industry-reports/ice-cream-market
[Accessed 15 Feb 2018].
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